At what point does taxing more actually reduces govt revenue?

In less than 6 minutes, economist Tim Groseclose explains why raising more taxes does NOT mean government will get more revenue.

In fact, there is a point when the opposite happens — when raising more taxes brings in less and less revenue to government.

Astoundingly, it was none other than Christina Romer, former Chair of the Council of Economic Advisers in the Obama regime, who did a study that found that a marginal (or top) tax rate of 33% is the point when increasing taxes becomes counter-productive. That should make us wonder why Obama and the Left keep insisting on raising taxes on “the rich”….

The obvious answer is:

They’re not doing that for the practical reason of increasing government revenue. They’re doing that for ideological class-warfare reasons.

The United Kingdom just discovered this truth, again.

In the 2009-2010 tax year in Britain, more than 16,000 people reported annual income of more than 1 million pounds (equal to about $1.6 million today). Then in 2010, Prime Minister Gordon Brown, a member of the Labour Party, introduced a new 50 percent top income tax rate for high-income earners. After that, the number of people reporting income of at least 1 million pounds fell to 6,000.

“It is believed that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes,” The Telegraph reported.

Instead of raising revenue, the tax hike cost the U.K. 7 billion pounds ($11.2 billion) in lost revenue — and that in an economy one-quarter the size of America’s.

H/t FOTM’s Joan

~Eowyn

5 responses to “At what point does taxing more actually reduces govt revenue?

  1. It’s a well known economic principle called the Law of Diminishing Returns. Taxes can be raised until a point is reached where the government takes in less revenues than they did before taxes were raised.

  2. Rather than increasing tax’s or reducing tax’s…How about, simply NOT funding the enemy to the tune of “hundreds of Billions of Dollars???”

    ” I M P E A C H , O B O Z O . . . N O W ! ! ! “

  3. Art Laffer and Stuart Varney couldn’t say it any CLEARER!!!!!

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